May It Please The Court

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Ninth Circuit Schools Employers How To Handle Disgruntled Employees

Employers take note:  when you're faced with a disgruntled employee who you place on administrative leave, but still allow the employee to maintain possession of one of your computers or laptops, the Ninth Circuit just gave you a road map on how to handle it.

First, send a letter to the employee instructing the employee to maintain the integrity of the hard drive and not to erase anything.

Then (if you anticipate a big blowup), before you fire the employee, file a declaratory relief action with the Court and explain your reasons for wanting to fire the employee.  That way, you can fire the employee with the court's endorsement and you won't have to worry about a backlash.

In the actual case, Leon v. IDX Systems, the employee (a medical doctor) deleted some 2,200 files from the company's laptop and then filed a wage and hour claim with the Department of Labor and another one against the company.  The employee had threatened to take whistle-blower actions against the company, including actions for violation of the False Claims Act, Sarbanes-Oxley and the Americans with Disabilities Act.  As you can guess, these claims were a time bomb for the company, which is likely why it decided to take a preemptive strike and file suit against the employee.  The company won, and won big.

The Ninth Circuit upheld the trial court's two decisions to slap the employee with a $65,000 monetary sanction for evidence spoliation and dismiss the employee's wage and hour claim against the company.  The appeals court also reversed the trial court's refusal to likewise dismiss the employee's claim with the US Department of Labor

The strategy worked:  the company can now terminate the employee, the employee is barred from his claims against the company (including wages) and the employee now owes the company money.  A triple play.

Printer friendly page Posted by J. Craig Williams on Thursday, September 21, 2006 at 19:46 Comments (0) |

Coast to Coast Internet Radio Examines The Backdating Stock Option Controversy

The Justice Department and SEC are dead serious, investigating companies for falsifying documents and as a result, allegedly lying to shareholders about what stock option awards cost the company.  Criminal and civil charges are being filed and nearly 100 companies are under investigation.

Even corporate officers are under scrutiny.  But what is backdating stock options all about?  Is your company or client at risk? Join me and my fellow Coast to Coast co-host and blogger Bob Ambrogi as we get the answers from the 'go-to' expert on the topic. 

Our special guest, Attorney Steven R. Barth, partner with Foley and Lardner LLP in Milwaukee, provides legal analysis on issues such as this to public and private companies.  He is also the Chairperson of the National Directors Institute focusing on corporate governance issues. He takes us through what backdating stock options means, how to discover it, how to prevent it and what to do if the government comes knocking.  Listen and hear what you need to know.  Just give a click on the icon below.


Printer friendly page Posted by J. Craig Williams on Wednesday, September 20, 2006 at 10:57 Comments (1) |

Liberty Dollar Coins Strike At Heart Of U.S. Mint

Check out those coins in your pocket a little bit closer.  If you have a Liberty Dollar coin and try to spend it, you could be going to jail.  The United States Mint is none too happy with the manufacturers of the Liberty Dollar coin, and has issued a warning to those who try to use it as currency. 

Nonetheless, many people are more than pleased to use the coin as currency.

The safe bet, obviously, is to collect the coins and treat them like collectibles.  Alternatively, you could fill up your bunker with them.

Printer friendly page Posted by J. Craig Williams on Sunday, September 17, 2006 at 11:52 Comments (1) |

Who's Funding The Campaign Against Prop 87, The $400 Million Tax On Oil?

Regular readers know that MIPTC occasionally exhibits some small amount of sarcasm.  I'd say it shows up in just about every post, but that's just me.  Today's post, however, will be a model of restraint.  Let's get started.

Our players today include Californians for Clean Energy, the group that got Prop 87 on the ballot.  On the other side are Californians Against Higher Taxes.  Here's the primer for those among us who are consistently challenged by trying to remember what number stands for which Proposition and whether we're supposed to vote for or against it and which election we're supposed to vote in:  CCE is the link for those who support Prop 87, and CAHT is the link for those who oppose Prop 87. 

If you're measuring the effect of Prop 87 in dollars, it will impose a $400 million tax on oil companies.  Call me silly, but my guess is that the net effect of the tax will be passed on to you and me.  Sure, oil company profits are soaring, but perhaps a better alternative would be to buy stock in the oil companies, not tax them. 

I'm just looking out for our collective pocketbooks.

On the other hand, if you're measuring the effect of Prop 87 for the environment, it looks like the money will be well spent. 

I'm just looking out for our environment.


The Californians for Clean Energy want to clear up your confusion, so they sued to make Californians Against Higher Taxes reveal the two biggest entities who are donating money to the cause.

Now unless you've been on Pluto, which by the way is no longer a planet and plans to bring suit against the scientists who de-planetized it (another story for another day), the you likely already have the answer that Californians for Clean Energy want you to know.

Let's see.  What do we know so far?  Prop 87 wants to tax oil companies some $400 million dollars.  A group called Californians Against Higher Taxes opposes the Proposition and has started a media campaign to kill the Proposition.

Who do you think supports Californians Against Higher Taxes?  I'll go out a limb here and venture a guess that it's the OIL COMPANIES? 

Just a guess.

Printer friendly page Posted by J. Craig Williams on Saturday, September 16, 2006 at 12:17 Comments (1) |

Video Blogger Headed For Jail, And Likely To Stay There

Josh Wolf filmed a protest against capitalism in San Francisco, and then sold some of his video to local TV stations.  In the protest, an explosive device was placed under a police car and a policeman was injured.

Prosecutors sought a full copy of the videotape from Wolf, who fought back claiming a First Amendment right not to release the video.  Wolf is a blogger who writes The Revolution Will Be Televised.  He also claimed the journalist's privilege

Josh, whose online moniker is "Insurgent," was ordered to jail by the trial court, but freed while his appeal was pending.  A three-judge panel of the Ninth Circuit recently rejected the appeal out of hand, and the prosecutor just filed a motion to revoke his bail and return him to jail.

Josh remains defiant.

The First Amendment and the journalist's privilege likely don't cover Josh's situation.  First, he already released his video to television stations and put it out to the world.  He'd have a make a significant showing why the rest of the videotape was privileged.  He likely can't make that showing, although I haven't seen the videotape, so it's difficult to say one way or the other.  Second, the First Amendment isn't absolute, just like the journalist's privilege.  The real problem is that the video was filmed in a public environment, and if it's solely of the violence, then there's probably no source to protect, and nothing that would even invoke either protection.  Finally, the public interest in prosecuting violence likely outweighs any privileges that Josh would have in the videotape.

MIPTC predicts defeat for Josh's claims and a long time in jail if he remains defiant. 

Printer friendly page Posted by J. Craig Williams on Friday, September 15, 2006 at 12:38 Comments (0) |

Coast to Coast Internet Radio Remembers 9/11

This week on Coast to Coast we would like to remember the victims of 9/11 and their families.  It has been five years since the United States was attacked and the victims will never be forgotten.  Join me and my fellow blogger and co-host Bob Ambrogi as we welcome Attorney Robert Haefele from the national firm of Motley Rice, to discuss the considerable amount of pro-bono work Motley Rice has done to help 9/11 families.

In contrast, Coast to Coast touches upon a story about a law firm whose tactics are being criticized with respect to the recent Kentucky crash of Comair Flight 5191. In the second part of our show, Coast to Coast welcomes Attorney Ben Cowgill and Attorney Steve Frederick, both Kentucky attorneys, to discuss the crash and the actions of plaintiff attorneys. Donít miss it!


Printer friendly page Posted by J. Craig Williams on Thursday, September 14, 2006 at 11:56 Comments (0) |

"You're Suing Me For What?"

Orange County, California has a new newspaper, the OC Post, that started littering my sidewalk about a week and a half ago.  They're giving it away for free, and charging 25 cents on the newsstand.  Go figure.

So far, I've been throwing it in the trash, along with that other weekly newspaper, the Irvine World News, put out by the same publisher that puts out the Orange County Register.  My better half, Lisa, on the other hand likes the second of the three for its local coverage. 

But the headline quoted above on the front page caught my attention.  I am, after all, a lawyer.  The article features a group of frivolous lawsuits, including a guy who's a Michael Jordan look-alike who's suing .... yep, you guessed it, Michael Jordan.  For $832 million.

I have no idea how he came up with $832 million.  If anything, it's creative.  But that's about it.  According to the article, the look-alike is six inches shorter, twenty-five pounds heavier and eight years older than the real thing.  So he dropped his suit. 

Then there's the lawsuit against Hershey's for lead in its chocolate.  While that may alarm you at first, the amount of lead is no more than naturally occurs in cacao beans and the other ingredients that make up chocolate.  So relax, and dig into that chocolate bar, and save me a piece.

The next one is the suit against apartment complexes for failing to warn their tenants of the dangers of cigarette smoke and engine exhaust.  Last time I thought about it, I already knew that cigarette smoke causes cancer because of the Surgeon General's warning and that exhaust wasn't good for you because I watched CSI (the hose into the car with the windows rolled up trick). 

The article goes on to chronicle extortion lawsuits like the ones brought against liquor stores for failing to advertise that their point-of-sale terminals charged a usage fee, lawsuits suing people who send junk faxes (although that's one I would approve of), and other shakedown lawsuits.

The article was apparently written to highlight the upcoming Lawsuit Awareness Week, scheduled for October 2-6, and sponsored by the Corona Del Mar-based Citizens Against Lawsuit Abuse

Go ahead and make your obligatory lawyer joke here:   just remember you heard it here second, after the OC Post.  But then again, it didn't show up on your driveway, did it?

Printer friendly page Posted by J. Craig Williams on Wednesday, September 13, 2006 at 22:25 Comments (0) |

The Party Of The Second Part Didn't Buy The Party Of The First Part's Non-competition Agreement

Listen up buyers and sellers of businesses:  be careful what you sell and what you buy.  A recent case decided by the court of appeals here in Orange County warns us that contracts that sell more than can be sold are void.  In Strategix, Ltd. v. Infocrossing West, Inc. the parties sought to interpret a contract between the two.  Let me explain.

Strategix sold its business to Infocrossing's predecessor, SMS, and in that agreement, the parties made two agreements.  First, Strategix agreed it would not compete with SMS or solicit its own employees and customers away from SMS.  Second, it  agreed it would also not solicit SMS' (and by succession, Infocrossing's) employees or customers. 

There's just one problem.  It's the party of the second part, to quote an old lawyer's phrase. 

In California, there's a law that encourages competition between parties and disallows agreements that prevent competition between companies for either employees or customers.  It's Business & Professions Code section 16601.

In other words, a company can't stifle this kind of competition as part of a sale of one business to another.  It can, however, prevent the company that is selling its assets, customers and employees to the buying company from stealing those customers and employees back.

The other direction, however, is a no go.  Because the selling company has virtually no way of knowing who works for the buying company or the customers of the buying company.  In this case, Infocrossing had convinced the trial court to issue an injunction preventing Strategix from soliciting Infocrossing's employees or customers.  The appellate court reversed, invalidating the injunction. 

Strategix is free to compete with Infocrossing, and the court likewise refused to "blue pencil" the agreement between the two companies to save it. 

Like I said before, be careful what you think you're buying.

Printer friendly page Posted by J. Craig Williams on Tuesday, September 12, 2006 at 01:36 Comments (0) |

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